You Win Some, You Lose Some - Market Indicators Report | 2017 NEW ZEALAND RETAIL - Colliers International
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Market Indicators Report | 2017 NEW ZEALAND RETAIL You Win Some, You Lose Some Accelerating success.
Commercial Bay Retail Centre Cnr Queen Street & Customs Street West, Auckland Central Precinct Properties’ 39,000 sqm PwC Tower and 18,000 sqm Commercial Bay retail centre in downtown Auckland is underway. The retail and hospitality spaces span three levels and will feature an expansive new food hall called Harbour Eats, designed by New York-based designer AvroKO. The complex will have 700 seats and open air atriums. The retail precinct is anticipated to be home to 100 retailers, a mix of 30% major retailers, 45% specialty retail and 25% food and beverage. The Commercial Bay retail centre is expected to open by early-2019. Artist's impression
Contents Retail Market Indicators | 2017 4 Introduction 6 Key Findings 6 Auckland 8 Wellington 10 Christchurch 12 Hamilton 13 Tauranga/Mt Maunganui 13 Rotorua 13 Hawke's Bay 13 Dunedin 14 Queenstown 14 Outlook 15 colliers.co.nz/Find-Research Join our LinkedIn group: Colliers International New Zealand Follow us on Twitter: @ColliersIntNZ Subscribe on YouTube: ColliersIntNZ
IN BRIEF
NEW ZEALAND RETAIL
MARKET INDICATORS | 2017
1 AUCKL AND 5 HAWKE'S BAY
Vacancy: 3.3% Average Prime Net Rent: $423/m2
Average Prime Net Rent: $1,014/m2 Average Secondary Net Rent: $248/m2
Average Secondary Net Rent: $533/m2 Average Prime Yield: 7.1%
Average Prime Yield: 5.6% Average Secondary Yield: 7.8%
Average Secondary Yield: 7.6%
OUTLOOK: Demand: Supply:
Retail Investor Confidence:
Net Positive: 16%
OUTLOOK: Demand: Supply:
2 HAMILTON
Average Prime Net Rent: $388/m2
Average Secondary Net Rent: $175/m2
Average Prime Yield: 6.5%
Average Secondary Yield: 9.1%
OUTLOOK: Demand: Supply:
8
3 TAURANGA/MT MAUNGANUI
Average Prime Net Rent: $444/m2
Average Secondary Net Rent: $231/m2
Average Prime Yield: 5.4%
Average Secondary Yield: 6.1%
OUTLOOK: Demand: Supply:
4 ROTORUA
Average Prime Net Rent: $265/m2 9
Average Secondary Net Rent: $150/m2
Average Prime Yield: 6.5%
Average Secondary Yield: 8.3%
OUTLOOK: Demand: Supply:
11
Source: Colliers International Research 10
Refer to Market Indicators on page 7 for further breakdown.
Comparing Q3-16 to Q3-17 for financial indicators &
Q2-16 to Q2-17 for physical indicators.
4
1
3 6 PALMERSTON NORTH
2
Average Prime Net Rent: $450/m2
4 Average Secondary Net Rent: $150/m2
Average Prime Yield: 7.0%
Average Secondary Yield: 9.5%
OUTLOOK: Demand: Supply:
5
7 WELLINGTON
Vacancy: 5.6%
Average Prime Gross Rent: $1,295/m2
Average Secondary Gross Rent: $730/m2
6 Average Prime Yield:
Average Secondary Yield:
6.9%
7.4%
Retail Investor Confidence:
Net Positive: 6%
7 OUTLOOK: Demand: Supply:
10 DUNEDIN 8 NELSON
Vacancy: 8.3% Average Prime Net Rent: $575/m2
Average Prime Net Rent: $850/m2 Average Secondary Net Rent: $325/m2
Average Secondary Net Rent: $300/m2 Average Prime Yield: 6.8%
Average Prime Yield: 6.8% Average Secondary Yield: 7.3%
Average Secondary Yield: 9.5%
OUTLOOK: Demand: Supply:
OUTLOOK: Demand: Supply:
11 QUEENSTOWN 9 CHRISTCHURCH
Average Prime Net Rent: $1,650/m 2
Average Prime Net Rent: $825/m2
Average Secondary Net Rent: $725/m2 Average Secondary Net Rent: $513/m2
Average Prime Yield: 4.5% Average Prime Yield: 6.6%
Average Secondary Yield: 5.5% Average Secondary Yield: 7.3%
OUTLOOK: Demand: Supply: Retail Investor Confidence:
Net Negative: 4%
OUTLOOK: Demand: Supply:
5
Introduction Retail Investor Confidence
Auckland Wellington Christchurch
Strong population growth and booming tourism have consolidated the 80%
positive retail environment in New Zealand over the past 12 months. 60%
Yields have continued to firm with interest from offshore and local 40%
investors keeping competition high. Like the other commercial sectors,
20%
investors are struggling to find opportunities to purchase. The
Net Percent
0%
environment remains challenging for some retailers, illustrated by
Sep-12
Mar -13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
Mar-17
Sep-17
several corporate failures. The rise of e-commerce is constantly -20%
challenging traditional brick and mortar stores and shopping malls to -40%
adapt and evolve. -60%
-80%
The ANZ Business Confidence Index has turned negative in October
2017, falling to a net 10% pessimistic about the year ahead. This marks a Source: Colliers International Research
10-point fall in a month. Most survey responses were received in the
first half of October before the government coalition was decided. The
survey primarily reflects the uncertainty around the outcome rather
than the outcome itself. Consumer confidence has showed some Retail Property Sales by Region
resilience despite recent house price easing and political uncertainty
Auckland Region Wellington Region Canterbury Region
post-election. The ANZ-Roy Morgan Consumer Confidence Index
Rest of New Zealand Number of Sales
dropped 3.5 points to 123.7 in November 2017, down from 127.2 from 12
months ago, but still highly positive.
$3,500 3,500
Food and beverage spending in New Zealand has grown considerably in $3,000 3,000
Value of Sales $(millions)
2017, supported by the booming tourism market and the influx of $2,500 2,500
Number of Sales
visitors for the World Masters Games and the Lions rugby tour. Annual
$2,000 2,000
international visitor arrivals hit 3.68 million for the September 2017
year, up 9% compared to a year ago. Total retail sales value grew 5.4% on $1,500 1,500
an annual basis in September 2017. The biggest core retail contributors $1,000 1,000
were supermarket and grocery stores spending at $4.7 billion, followed
$500 500
by food and beverage, making up a total value of $2.7 billion.
$0 0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Retail property sales in New Zealand reached $867 million in the 10
months to October 2017, made up of 556 sales. More than half (60%)
occurred in Auckland. The full year in 2016, reached $2.5 billion. Source: CoreLogic, Colliers International Research
2017 sales data up to October (not a full year).
Key Findings Retail Spending by Category
Core Supermarket & grocery stores 2.9%
>> Strong visitor numbers into New Zealand are helping boost retail
Retail
sales, especially in the food and beverage sector. Food & beverage services 7.7%
Hardware, building & garden supplies 3.3%
>> Tenant demand remains buoyant on the main CBD strips in
Pharmaceutical & other store based retailing 4.1%
Auckland and Wellington.
Department stores 3.1%
>> New retail developments in central Christchurch are taking shape,
Accommodation 9.8%
bringing back more foot traffic into the area.
Clothing, footwear & accessories 8.7%
>> Regionally, Hamilton, Tauranga, and Queenstown continue to
Electric & electronic goods 8.8%
benefit from strong population growth and tourist inflows, with
positive flow on effects to the retail sector. Furniture, floor covering, houseware & textiles 3.7%
Recreational goods 1.2%
>> The demise of some high-profile retailers highlights the competitive
nature of the retail market and threats from growing e-commerce. Non-store & commission based retailing 14.9%
This may limit landlords’ ability to increase rents significantly over Specialised food 5.1%
the short term. Liquor 11.9%
>> Consumer preferences are ever changing. Online shopping, ‘click Vehicle- Motor vehicles & parts 9.5%
related
and collect’ services, same day delivery orders, food subscription Fuel 0.1%
boxes, are all gaining traction, and diverting traffic away from $0 $1,000 $2,000 $3,000 $4,000 $5,000
physical stores. $ (million)
>> Shopping centres have been evolving, with mall owners continuing
to invest heavily in expansion to reinvigorate tenancy mix and
enhance shoppers’ experience, through improved amenities like
Source: Stats NZ, Colliers International Research
free Wi-Fi, retail laneways, outdoor dining areas and well-designed Actual retail sales values for September 2017 year.
shared spaces. Data label is the annual percentage change from same quarter previous year.
6
New Zealand Retail Market Indicators Q3 2017
Net Prime Rents Net Secondary Rents Prime Capital Secondary Capital Prime Market Secondary Market
Precinct ($/m²)*** ($/m²)*** Value* ($/m²) Value* ($/m²) Yields** (%) Yields** (%)
Low High Low High Low High Low High Low High Low High
AUCKLAND
CBD 1,700 4,300 800 1,000 28,335 95,555 9,410 15,385 4.50% 6.00% 6.50% 8.50%
Newmarket 800 2,000 500 750 13,335 47,060 5,880 10,000 4.25% 6.00% 7.50% 8.50%
Ponsonby Road 750 1,350 550 750 12,500 31,765 N/A N/A 4.25% 6.00% N/A N/A
Parnell Rise 600 850 N/A N/A 8,570 18,890 N/A N/A 4.50% 7.00% N/A N/A
Dominion Road 325 520 N/A N/A 4,645 10,945 N/A N/A 4.75% 7.00% N/A N/A
Takapuna 500 1,000 300 450 7,145 22,220 3,530 6,000 4.50% 7.00% 7.50% 8.50%
HAMILTON
CBD 250 525 100 250 3,570 8,750 975 3,125 6.00% 7.00% 8.00% 10.25%
ROTORUA
CBD 180 350 100 200 2,485 6,085 1,175 2,500 5.75% 7.25% 8.00% 8.50%
TAURANGA
CBD 300 450 175 250 4,615 8,180 2,335 3,845 5.50% 6.50% 6.50% 7.50%
MT MAUNGANUI
CBD 375 650 200 300 7,145 15,295 3,480 6,315 4.25% 5.25% 4.75% 5.75%
NAPIER
CBD 450 700 200 450 6,000 10,770 2,500 6,000 6.50% 7.50% 7.50% 8.00%
HASTINGS
CBD 220 320 120 220 2,750 4,925 1,410 2,935 6.50% 8.00% 7.50% 8.50%
PALMERSTON NORTH
CBD 300 600 100 200 4,000 9,230 1,000 2,220 6.50% 7.50% 9.00% 10.00%
WELLINGTON
Lambton Quay 2,120 2,282 680 780 30,285 36,510 9,060 10,750 6.25% 7.00% 7.25% 7.50%
Willis Street 881 1,424 N/A N/A 11,740 21,900 N/A N/A 6.50% 7.50% N/A N/A
Courtenay Place 764 986 N/A N/A 10,180 15,160 N/A N/A 6.50% 7.50% N/A N/A
Cuba Mall 682 1,225 N/A N/A 9,095 18,845 N/A N/A 6.50% 7.50% N/A N/A
NELSON
CBD 450 700 250 400 6,000 11,665 3,335 5,715 6.00% 7.50% 7.00% 7.50%
CHRISTCHURCH
City Mall 650 1,200 500 600 9,630 20,000 6,665 8,890 6.00% 6.75% 6.75% 7.50%
CBD 650 800 350 600 8,665 13,335 4,375 8,570 6.00% 7.50% 7.00% 8.00%
QUEENSTOWN
CBD 1,300 2,000 450 1,000 26,000 50,000 7,500 20,000 4.00% 5.00% 5.00% 6.00%
DUNEDIN
CBD 500 1,200 150 450 6,250 21,820 1,365 5,625 5.50% 8.00% 8.00% 11.00%
***Wellington based on gross face rents
Main Retail Centres Market Indicators Q3 2017
Net Face Rents Operating Expense Prime Capital Value* Prime Market Yields**
Shopping Centres ($/m²)*** ($/m²) ($/m²) (%)
Low High Low High Low High Low High
AUCKLAND
Regional Shopping Centres 650 1,850 170 270 8,385 32,745 5.65% 7.75%
District Shopping Centres 260 750 150 230 2,970 12,000 6.25% 8.75%
Bulk Retail Centres 200 450 45 75 2,425 7,200 6.25% 8.25%
WELLINGTON
Regional Shopping Centres 700 1,450 170 230 6,250 17,855 7.00% 8.00%
District Shopping Centres 585 1,235 270 300 3,335 12,665 7.50% 9.00%
Bulk Retail Centres 260 355 40 70 2,280 4,000 7.50% 9.00%
CHRISTCHURCH
Regional Shopping Centre 600 2,500 170 270 6,665 25,715 7.00% 8.00%
District Shopping Centres 350 1,800 150 230 3,500 31,250 8.00% 9.00%
Bulk Retail Centres 200 330 25 60 2,105 4,715 7.00% 8.50%
Source: Colliers International Research Assumes 100 sqm shop *Assuming fully leased at market rates **Assuming freehold
Note: Figures are rounded ***Wellington based on gross face rents
7
Auckland Auckland Retail Vacancy
Jun-16 Jun-17
12%
The Auckland retail sector is holding firm despite plateauing house
prices and changes in business and consumer confidence post-election. 10%
The growing population is bolstering demand for goods and services
Vacancy Rate
8%
which bodes well for retail activity overall.
6%
4%
Supply & Demand 2%
>> Strip retail vacancy in Auckland remains tight, having reduced to 0%
Overall
CBD
Queen St
Newmarket
Parnell
Ponsonby Rd
Dominion Rd
Takapuna
Henderson
Massey North /Westgate
Otahuhu*
3.3% in June 2017 (down 1.5% from a year ago), now at levels not
seen since mid-2015.
>> Retail vacancy in Queen Street has increased marginally to 2.8% in
September 2017, up 0.1% from a year ago. Strong tenant demand for
prime retail space continues. Source: Colliers International Research
>> Precinct Properties, the owner of the new $941 million Commercial *New to the survey
Bay development is set to open its 18,000 sqm retail offering in two
phases. Phase one is scheduled to open by mid 2018 (20%), while
the balance (80%) is scheduled for Q1 2019.
>> Sylvia Park, one of New Zealand’s largest shopping centres, owned WestCity Waitakere
by Kiwi Property is underway with a new dining lane, The Grove, 7 Catherine Street, Henderson, Auckland
which integrates with the 10-level office tower currently under
construction. In advanced planning is a proposed new galleria
level expansion for a further 20,000 sqm.
>> Kiwi Property has also expanded its land holdings in Mt
Wellington to over 30 hectares by acquiring two properties, at 79
Carbine Road and 10 Clemow Drive adjoining Sylvia Park for $27.1
million. There are no immediate plans to redevelop the land.
>> A major shopping expansion project at Westfield Newmarket,
owned by Scentre Group is not yet confirmed, but if it proceeds will
see the centre expand to 78,000 sqm from the existing 31,000 sqm.
New anchor tenants proposed include Farmers, Countdown and
cinemas.
Rents & Incentives Adelaide based Angaet Group purchased the 36,108 sqm shopping
centre for $153 million from owners Scentre Group. The five hectare
>> Auckland CBD average net face rents have increased 1.8% over the
freehold mall includes key anchors such as The Warehouse, Farmers,
past 12 months, reaching $2,850 per sqm in September 2017, from
Countdown and Event Cinemas.
$2,800 per sqm. Low vacancy for prime retail space is likely to keep
rentals firm in prime locations.
>> Queen Street continues to command the highest rents in Auckland,
highlighting the importance of profile and exposure to foot traffic.
Hunters Plaza
>> Non-CBD landlords’ expectations of rent rises over the next year are 217 Great South Road, Papatoetoe, Auckland
likely to be modest.
Yield & Investment
>> Investor sentiment in Auckland retail property was a net positive
16% in our September 2017 confidence survey, down from net
positive 47% from a year ago, but higher than the June quarter.
>> Average prime CBD retail yields have firmed 30 basis points, to 5.6%
in September 2017 from a year ago.
>> Major transactions over the past 12 months included the sale of the
former Westfield WestCity, selling for $153 million to Adelaide based
Angaet Property Group. Hunters Plaza and Kelston Shopping Centre
also transacted in 2017, selling for $50.6 million and $36 million
respectively.
Hunters Plaza was purchased by the listed Australian fund, Elanor
Investors Group for $50.6 million in June 2017. The centre has a net
lettable area of 15,885 sqm and was the investor’s first New Zealand
acquisition, with a tenant remixing plan due to commence at the end of
2017.
8
SOU
TH
ER
N
MW
Y
Cust
oms
St We BRITOMART
st Luxury/International
Northern Shopping Centres
0.6% $3,700
NOR
2.6%
TH
National Branded
18
ER
Sh o
Y Takapuna 3.9% $2,700 r t l a n d St
N
W
M
MW
O UR 4.1% $750 5.8% ia St
West
Y
V ict o r
t
B
High S
Vict
H AR Col le ge Hil l
oria
St E
t
ast
en S
ER
AUCK
Wel
Q ue
les
P
ley S
UP
t We
st
LA
Entertainment/Service
ND
2.3% $1,095
H
Ponsonby
N O RT H
t
A
en S
Auckland CBD
M
St
IL
Q ue
0.5% $1,050 5.1%
y
TO
le
ES
an
W
TE
N
We
St
RN
ll
MW
HW
es
Y
l ey
St
Y
ED
Ea
POS
t
en S
st
Parnell
PRO
16
Q ue
16
6.2% $725 5.9%
Henderson
Central Shopping Centres
5.5% $325 6.1%
2.1%
St
Newmarket
t
ley
en S
an
2.5% $1,400 5.1%
Que
St
SO
UT
H SOUTH
WE ER
Western Shopping Centres ST N
ER
Rd N
2.5% er MW
Dominion Rd
M
m
W
um Y
Cr
Y
4.2% $435
16 5.9%
PROPOSED
KEY
Y
W
M
Overall
N
A
R
Vacancy Rates (%)
E
T
U
S
CK
Average Prime Retail
E
W
LA
Net Rents ($/m2)
H
T
ND
R
Average Prime Southern Shopping Centres Eastern Shopping Centres
O
N
Market Yields (%)
1.1% HA 0.7%
M
Trend IL
TO
Actual 0%/$0
N
Financial Indicators:
H
W
Sep-16 to Sep-17
20
Y
Physical Indicators:
Jun-16 to Jun-17
Source: Colliers International Research Note: Shopping centres include city centres, town centres, regional centres,
district centres, neighbourhood centres, bulk retail centres and others.
Auckland Retail Market Review
2017 compared to 2016
Enquiry = Average prime net rents $1,014/m2
Consumer confidence = Average secondary net rents $533/m2
Investor confidence net positive 16% Average prime yields 5.6%
Supply Demand Average secondary yields 7.6%
Buyer groups = private, institutional investors and Overall vacancy 3.3% (Jun-17)
syndicators
9
Wellington Wellington Retail Vacancy
25%
Jun-16 Jun-17
Lambton Quay has flourished over the past few years, receiving most
of the tenant enquiries from national and international retailers, but 20%
low vacancy is making it difficult to find suitable space. For those who
Vacancy Rate
can’t wait, tenant demand has shifted to other precincts within the 15%
central city including Willis Street.
10%
Supply & Demand 5%
>> Demand remains strong for retail space in Wellington with the overall 0%
Lambton Quay
Overall
CBD Core
Willis St
Manners St
Cuba St
Dixon St
Courtenay Pl
retail vacancy rate reducing to 5.6% in June 2017, down from 8.9%, a
year ago.
>> Lambton Quay continues to be highly sought after with vacancy
reducing to 3.3% in June 2017, down from 3.5%, a year ago. Topshop New Source: Colliers International Research
Zealand went into receivership in September 2017 leaving close to 1,300
sqm. The next survey is likely to show increased vacancy.
>> Increased interest on Willis Street by a growing list of high end retailers
has seen retail vacancy tightening to 6.8% in September 2017, down 1%
from a year ago.
Rodd & Gunn
46 Willis Street, Wellington Central
>> Some retailers around Lambton Quay, Manners Street and Cuba Street
will have to relocate as remedial work gets underway on a number of
buildings.
>> Strengthening work is taking place on Stewart Dawson's corner which
has displaced a number of retailers including Rodd & Gunn who have
relocated to 46 Willis Street on a new 11-year lease term.
>> New developments are also occurring on Victoria Street and Lombard
Lane, in addition to the strengthening on the former Farmers building
on Cuba Street, refurbishment to 7 Woodward Street and a new retail
block on a car park in Thorndon Quay.
Rents & Incentives
Rodd & Gunn has signed a new 11 year lease at 46 Willis Street and
>> Average prime retail gross rents in Wellington CBD have increased 7.3%
features an extensive fit out encompassing the “New Zealand lodge
from a year ago, reaching $1,295 per sqm in September 2017.
feel” which includes high ceilings, and natural materials like timber and
>> Gross prime rents on Lambton Quay grew 9.8% from a year ago stone.
reaching $2,200 per sqm on average. The outlook for prime rents is
stable over the next 12 months.
>> Secondary retail space rents have remained relatively flat over the past
12 months.
H&M, Queensgate Shopping Centre
>> Bulk retail rents have remained steady over the past year. Queens Drive & Bunny Street, Lower Hutt, Wellington
Yields & Investment
>> Investor confidence in Wellington retail property was a net positive
6% in our September 2017 confidence survey, a decline from a year ago
(net positive 30%), highlighting the more negative sentiment
post-earthquake.
>> Investment activity has been at low levels over the past 12 months,
with a shortage of prime assets available for sale. Retail property sales
for the 10 months to October 2017 reached $54.2 million, made up of
43 sales. Full year results in 2016 totalled $170 million.
>> Average retail prime yields in the CBD have remained steady over the
past 12 months sitting at 6.9% in September 2017. Bulk retail yields
H&M opened its first Wellington store in October 2017, taking up over
have firmed 50 basis points to 8.25%. 2,000 sqm in Queensgate Shopping Centre. The retail space spans two
levels and forms part of the mall’s rejuvenation strategy after it was hit
by the 2016 Kaikoura earthquake.
10WELLINGTON RAILWAY STATION
North City
Lambton Quay
u ay
0.0%
Q
3.3% $2,201 6.6%
ton
Lamb
Willis Street
6.8% $1,152 7.0% 2
Queensgate Shopping Centre
t
lis S
Wil
0.4%
Johnsonville Shopping Centre
3.9%
1
Cuba Street
2
t
sS
3.5%
Willi
Wellington CBD
t
aS
KEY
Cub
Manners Street
Ma
Dix nn
e
8.4% Overall
on rs
St S Vacancy Rates (%)
ED
t
POS
PRO
Average Prime Retail
Gross Rents ($/m2)
Courtenay Place Cou
rten Average Prime
9.2% $875 7.0% ay P
l Market Yields (%)
t
aS
Trend
Cub
Actual 0%/$0
Financial Indicators:
Sep-16 to Sep-17
t
aS
Cub
Physical Indicators:
Jun-16 to Jun-17
PROPOSED
Source: Colliers International Research
Prime strip retail based on 100 sqm shop area
Wellington Retail Market Review
2017 compared to 2016
Enquiry = Average prime CBD gross rents $1,295/sqm
Consumer confidence = Average secondary CBD gross rents $730/sqm
Investor confidence net positive 6% Average prime yields 6.9%
Supply Demand Average secondary yields 7.4%
Buyer groups = private and institutional investors Overall vacancy 5.6% (Jun-17)
11Christchurch The Crossing
166 Cashel Street, Christchurch Central
The completion of new office developments is bringing workers back
into the CBD, stimulating much needed foot traffic for retailers. The
completion of major retail developments over the past 12 months has
further revived the retail precinct.
Supply & Demand
>> The large number of new developments completed in the last 12
months has created plenty of options for retailers in the
Christchurch CBD.
>> The retail status of the CBD is improving, but still competes with the
retail offering in the more established, suburban malls. The Crossing Shopping Centre on Cashel Street in central Christchurch
>> Some Christchurch retailers are taking a ‘wait and see’ approach, opened its doors to shoppers in September 2017. It features a 700-space
car park and a high-end supermarket, plus 55 retail tenancies and top
and holding back from re-entering the CBD to see how the city
fashion brands H&M, Country Road, Trenery, Witchery, Seed and Rodd
evolves and where the retail hot spots emerge. and Gunn.
>> The Crossing Shopping Centre opened in September 2017, featuring
55 retail tenancies, a 700 space car park, a high-end supermarket,
and top fashion brands such as H&M, Country Road, among other
retailers. The development is the largest privately-owned
The Terrace
Cnr Oxford Terrace, Christchurch Central
development in the CBD.
>> The Terrace development, bordering the Avon River, is expected to
open in November 2017. The retail offering is predominately food
and beverage with laneways, courtyard and corporate offices above.
>> Retail space on Cashel Street continues to be in hot demand.
>> In the suburban areas, there has been talks of further expansion to
existing shopping centres.
>> Kiwi Property is in the early planning stages of reviewing plans to
extend Northlands Shopping Centre, the second largest mall in
Christchurch. It has resource consent to extend the largest mall for
additional stores and foodcourt, offering outdoor seating areas.
>> Homebase Centre, north-east of Christchurch has land re-zoned
with plans for expansion including a new supermarket. A $140 million redevelopment of the Christchurch hospitality precinct
once known as The Strip on Oxford Terrace. The Terrace will feature
premium restaurant and bar offerings, with laneways, courtyards, roof
Rents & Incentives terraces and corporate offices above.
>> Typical net prime rents in the CBD continue to sit between $650
and $800 per sqm, with incentives being offered to attract retailers
back into the CBD. The Hub Hornby
>> Shopping centre rents have levelled out over the past 12 months, 418 Main South Road, Hornby, Christchurch
due to the increased level of new supply in the CBD.
Yield & Investment
>> Investor confidence in Christchurch retail property has dipped
into negative territory at a net negative 4% in our September 2017
confidence survey, a decline from a year ago, which was a net
positive 12%. The most recent quarter’s results show this trend
stabilising.
Shopping Centre Investments Limited have undertaken a $70 million
redevelopment at The Hub Hornby. The regional shopping centre is
anchored by a 6,000 sqm Farmers and 6,400 sqm PAK’nSAVE and has over
70 speciality stores.
12REGIONAL UPDATES
Hamilton Tauranga/
Mt Maunganui
>> Hamilton has experienced a considerable amount of retail tenant churn >>Food and beverage enquiries have help spur retail activity in the
over the past 12 months. Rents have remained static over the past 12 Tauranga CBD, but increased availability of retail space has seen net
months. prime rents dip slightly, ranging between $300 and $450 per sqm over
>> Seasonally adjusted annual retail spending in the Waikato region grew the past year.
7.2% in June 2017 quarter according to Statistics New Zealand, >>New developments at 2 Devonport Road and the civic administration
surpassing the rate of growth in the Auckland region of 6.2%. building are expected to be completed in 2020.
>> Major developments including two major inland ports, major >>Tenant demand continues to be exceptionally strong in Mt
expressway links, a new riverside theatre and new residential housing Maunganui, increasing over the last 12 months. Rents sit between
areas, are all contributing to the growth of the city. $375 and $650 per sqm for prime space.
>> The average prime retail yield in Hamilton sits between 6% and 7% in >>A $100 million redevelopment of the Farmers building in Tauranga’s
September 2017, firming around 50 bps over the past 12 months, driven CBD will see between 70-90 high rise apartments constructed above
by strong appetite for investment under $5 million. the retail complex. The retail will spread over two expansive floors
>> Yields for prime assets are expected to hold strongly, however investors with multiple levels of carparking for close to 400 vehicles.
are becoming more selective when considering secondary assets. >>Bayfair shopping mall, owned by AMP Capital has revealed plans for
>> Hamilton’s total value of retail property sales in the 10 months to October a $100 million expansion upgrade including 50 new shops, a new
2017 reached $27.7 million. It continues to be one of the most active Countdown, and a seven-screen cinema complex.
regional hotspots in New Zealand.
Rotorua Hawke's Bay
>> Retail vacancy has tightened further over the past 12 months with the >> Tourism spending in Hawke’s Bay region grew 7.7% in the year to
popular Eat Street at the lake end of Tutanekai Street receiving more September 2017, according to the Monthly Regional Tourism
demand than it can keep up with. Estimates by Ministry of Business, Innovation and Employment,
>> Increasing tourism numbers and retail spend have driven further surpassing the rate of growth in the Auckland region (6.1%).
development in Rotorua, attracting food and beverage operators. >> Buoyancy in the retail market has kept vacancy low in both Napier
>> Kmart is set to open its first store in Q1 2018, anchoring the $20 million and Hastings, especially in the main strip, where rents have remained
redevelopment of Trade Central, which is expected to add up to 20 stable.
new stores. Kmart is expected to occupy 5,300 sqm joining the >> Prime retail rents in Napier typically range between $450 and $700 per
existing Mitre 10 Mega. sqm, with Hastings between $220 and $320 per sqm.
>> The second stage of Lynmore Junction is complete, providing several >> Wallace Developments has lodged a resource consent for a 5,000 sqm
new restaurants, a gym and a dental practice. large-format development on the opposite corner from Mitre 10 Mega
>> Prime yields for high quality retail stock are achieving sub 6% with on Prebensen Drive.
secondary yields between 8% and 8.5%. >> Retail yields in the Hawke’s Bay remains steady, with the volume of
transactions slowing, due to the limited availability of stock available
for sale.
13Dunedin
>> Prime retail space is hard to find in Dunedin CBD, but conversely, Dunedin Retail Vacancy
secondary vacancy has been increasing over the past 12 months. This
has pushed overall retail vacancy up to 8.3% in June 2017. 8.4% 8.3%
>> Earthquake strengthening is still prevalent in the CBD, as older
buildings get upgraded to meet council standards. 8.2%
8.2% 8.1%
8.1%
>> Food and beverage has been on the rise in Dunedin with the north
Vacancy Rate
end of George Street continuing to attract boutique cafes, and the
8.0% 8.0%
Warehouse precinct fast becoming an eatery hot spot.
>> Tenant demand for bulk retail is outstripping supply, constrained by
the lack of affordable development land for bulk retail use. 7.8%
>> Investor demand remains strong for prime retail investments from 7.6%
locals and investors, especially those well-tenanted buildings situated 7.6%
in prime locations.
>> Landlords and investors are continuing to hold assets while capturing 7.4%
good returns, with little incentive to sell, limiting the availability of
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-12
stock for sale.
Source: Colliers International Research
Queenstown
>> Tourist arrivals into Queenstown Airport have reached 1.97 million Queenstown Central
passengers visitors in the year ended October 2017. Frankton, Queenstown
>> Retailers on the CBD main streets continue to benefit from increased
tourist traffic. Vacancies are rare.
>> With relatively tight supply in the CBD, further upward pressure on
retail rents is expected, particularly in the prime sector.
>> Frankton continues to expand, as it aims to service the growing
Queenstown population, which is currently growing at three times
the national average.
>> Queenstown Central, a new town square, is the newest retail
development going ahead in Frankton. It sits between Five Mile and
the PAK'nSAVE. Stage one is expected to be completed in October
2018, comprising 10,000 sqm of retail, 4,500 sqm of office and
anchored by Kmart, built across a 7.5 hectare mixed use site.
>> Stage two of Five Mile was completed early 2017, adding an additional Queenstown Central is under construction in Frankton by developer,
8,000 sqm to the existing centre, anchored by The Warehouse and Queenstown Central Limited. Stage one will comprise of 10,000 sqm of
Noel Leeming. retail and 4,500 sqm of office, anchored by Kmart and featuring vibrant
>> The significant increase in retail supply in Frankton is creating plenty main street and town square, speciality shops, restaurants and bars.
of options for retailers. Rents should remain flat over the next 12
months.
Queenstown Development Map
THE LANDING
NE DRIVE
HAW THOR
14Outlook
It’s been a year of ups and downs for the retail market. The growth in Shopping centres have been evolving, with mall owners continuing to invest
population and tourism has boosted retail activity across New Zealand. heavily in expansion to reinvigorate tenancy mix and enhance shoppers’
Changes in the demographics through new housing developments are also experience, through improved amenities like free Wi-Fi, retail laneways,
influencing retail demand characteristics. outdoor dining areas and well-designed shared spaces.
Retail sales volume has been growing, but margins haven’t always followed Moderating consumer confidence and house prices are hurdles for retailers
suit. The number of high-profile retail closures this year highlights the cost in the short term. Landlords will have to be realistic about rental uplifts.
burden associated with establishing brick and mortar stores including high However, the underlying economic drivers for New Zealand remain strong.
rents in prime areas and wages.
Consumer preferences are ever changing. Online shopping, ‘click and
collect’ services, same day delivery orders, food subscription boxes, are all
gaining traction, and diverting traffic away from physical stores.
NorthWest Stage 2,
1 Maki Street, Westgate,
Auckland
15Tauranga Crossing
Taurikura Drive, Tauriko, Tauranga
Stage 1 of Tauranga Crossing shopping centre opened
in September 2017, featuring more than 20 speciality
stores. Stage 2 will provide a fully enclosed two level
shopping centre including approximately 90 specialty
shops, eateries, and cinema. Stage 2a is expected to
open in late-2018 while Stage 2b is expected to open in
mid-2019.
For more information contact: Colliers International
Research and Consulting
Alan McMahon Josh Lee offers a range of commercial
National Director | Research Co-ordinator and residential property
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Director | Consulting
• Demand & Supply Studies
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151 Queen St,
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Whilst all care has been taken to provide reasonably accurate information within this report, Colliers International cannot guarantee
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